Update on Five Year Plan
Almarai Company 2015 Earnings Presentation
Disclaimer Information contained in this presentation is subject to change without further notice, its accuracy is not guaranteed and it may not contain all material information concerning the company. Neither we nor our advisors make any representation regarding, and assume no responsibility or liability for, the accuracy or completeness of, or any errors or omissions in, to any information contained herein.
In addition, the information contains projections and forward-looking statements that reflect the company’s current views with respect to future events and financial performance. These views are based on current assumptions which are subject to various risks and may change over time. No assurance can be given that future events will occur, that projections will be achieved, or that the company’s assumptions are correct. Actual results may differ materially from those projected. This presentation is strictly not to be distributed without the explicit consent of Almarai Company management under any circumstances.
Almarai Company
2015 Q4 Earnings Presentation
2
Business Highlights
Highlights – Full Year 2015 • Robust growth across all key products except cheese and within all geographical markets except Jordan • Market share gains across all products categories except UHT Milk • Successful launch of 15 new products • Reducing poultry segment losses by nearly 50% but still more work to be done • Business growth, market share gains and investment plan in Egypt continues in line with 5 year plan • Better procurement and cost control focus resulting in significant improvement in operational metrics • Further vertical alignment by securing additional land and feed supply under own management • Investment in our people with continued focus on training, benefit re-alignment and developing local talent; compensation scheme restructured to align rewards in line with both short term and long term goals • Successful settlement of the fire claim Solid performance of 2015 paving the way for achieving Almarai 2020 vision
Almarai Company
2015 Q4 Earnings Presentation
4
Impact of increase in energy costs on Almarai Impact As announced earlier, the expected direct impact of increase in energy costs on Almarai is ~200M SAR and the indirect impact is expected to be ~100M SAR. In addition, the expected impact of gradual move towards 100% importation of feed by 2019 will result in an additional 200M SAR cost, net of existing subsidy, for the year 2016. Mitigation plan Almarai already embarked on various efficiency projects to improve its supply chain. The positive effects of these mitigating actions will unfold during 2016 and beyond. A non exhaustive list of some of these key projects are: • Zabadi 60 • Telematics • Roadnet • New pallet design • New design of the purple crates • New bakery basket • Juice – 12 in a box • Dubai depot utilisation
Almarai Company
2015 Q4 Earnings Presentation
5
Highlights – Full Year 2015 EBITDA
Sales Revenue SAR 13.8 B 2014 2013 SAR 12.6 B B SAR 11.2
+9.4% +12.4%
SAR 3.3 B 2014 SAR 3.0 B
2015
SAR 4.0 B 2014 SAR 2.7 B
Employees 2014 38 k
Almarai Company
+10.4%
+46.2%
• • •
Insurance Claim Settlement Vanilla Sukuk of SAR 1.6B Expansion of Alfalfa sourcing
2015 Q4 Earnings Presentation
+14.4%
Free Cash Flow 2015
SAR 523 M 2014 SAR 84 M
Major Transactions
2015
42 K
2014 SAR 1.7 B
2015
SAR 4.9 B +54.2%
+10.7%
SAR 1.9 B
Capital Expenditure
Operating Cash Flow 2014 SAR 3.2 B
Net Income 2015
2015
2015
+521.5%
New Products •
15 new products in 2015
6
Innovation pipeline for 2015 1st Quarter 2nd Quarter 3rd Quarter
4th Quarter
Almarai Company
2015 Q4 Earnings Presentation
7
Sales growth was funded by continued investment in key categories
Capex spend for the year 2015 was 4.0 B SAR which is inline with our annual capex run rate.
• • • •
Manufacturing and Farming spent Capex of ~2.1 B SAR for various capacity expansion projects. Replacement and other capex including IDJ and US land development, accounted for another ~0.8 B SAR. Sales depot and logistics expansion accounted for ~0.6 B SAR. Poultry capex spend for the year reached ~ 0.5 B SAR.
Farming (Arable) Poultry Processing
Bakery Hail
Farming (Arable)
Bakery Hail
Makkah East Depot Operations (CPP3) Almarai Company
2015 Q4 Earnings Presentation
8
Sales Highlights
Sales Analysis by Segment by Product 13.8
Total Sales Revenue
(+1.2)
+9.4%
Sales Revenue
Dairy & Juice
Bakery
Poultry
Others
10.7 (78%)
1.6 (12%)
1.3 (9%)
0.2 (1%)
(+ 0.8)
(+0.1)
(+0.2)
(+0.0)
+6.1%
+23.4%
+11.9%
By Segment
+8.5%
Sales Revenue By Product
Fresh Dairy
Long-Life Dairy
Fruit Juice
Cheese & Butter
Bakery
Poultry
Other Sales
5.8 (42%)
1.3 (10%)
1.9 (14%)
1.7 (12%)
1.6 (12%)
1.3 (9%)
0.2 (1%)
(+0.5)
(+0.1)
(+0.2)
(-0.0)
(+0.1)
(+0.2)
(+0.0)
+10.2%
+8.6%
+13.7%
-2.0%
+6.1%
+23.4%
+11.9%
Note: All Amount in Billion Saudi Riyals
Almarai Company
2015 Q4 Earnings Presentation
10
Sales Analysis by Region by Country 13.8
Total Sales Revenue
(+1.2)
+9.4%
Sales Revenue By Region
KSA
Other GCC Countries
Other Countries
8.8 (64%)
3.7 (26%)
1.3 (10%)
(+0.8)
(+0.3)
(+0.2)
+8.5%
+10.3%
+13.5%
Sales Revenue By Country
KSA
UAE
Oman
Qatar
Kuwait
Bahrain
Egypt
Jordan
Others
8.8 (64%)
1.3 (10%)
0.7 (5%)
0.7 (5%)
0.6 (5%)
0.3 (2%)
0.9 (6%)
0.3 (2%)
0.2 (1%)
(+0.8)
(+0.1)
(+0.0)
(+0.1)
(+0.0)
(+0.0)
(+0.2)
(-0.0)
(-0.0)
+8.5%
+13.4%
+4.5%
+14.8%
+6.7%
+9.2%
+36.4%
-7.1%
-24.1%
Note: All Amount in Billion Saudi Riyals
Almarai Company
2015 Q4 Earnings Presentation
11
Statement of Income
Full Year
SAR million
2015
Sales
13,795
Cost of sales
(8,511)
Change
12,606 (8,013)
9.4% 6.2%
Gross Profit
5,283
4,593
Selling and Distribution Expenses
(2,612)
(2,246)
16.3%
(409)
(349)
17.3%
General and Administration Expenses
2,262
Operating Income
1,998
15.0%
13.2%
Share of Results of Associates
(37)
(8)
357.2%
Other (Expense) / Income
(131)
(27)
391.1%
Funding Costs
(276)
(266)
3.8%
46
58
(20.2%)
1,864
1,755
Exchange and Currency Gains/(Losses) Income from Main Operations Zakat and Foreign IncomeTax Income before Non Controlling Interest
(66) 1,799
Non Controlling Interest
117
Net Income Earnings Per Share (Basic)
Net Income %
Almarai Company
2014
(71) 1,684 (10)
1,916
1,674
3.13
2.72
13.9%
13.3%
2015 Q4 Earnings Presentation
6.2% (7.5%) 6.8% n.a 14.4%
12
Full Year Results
Operating Performance Gross Profit in million SAR
% to Sales
36.4%
38.3%
Operating Income
Almarai Company
+691
in million SAR
in million SAR
15.8%
16.4%
5,283 4,593
Net Income 13.3%
13.9%
1,916
2,262 1,998
+264
1,674
+241
Full Year
Full Year
Full Year
Full Year
Full Year
Full Year
2014
2015
2014
2015
2014
2015
2015 Q4 Earnings Presentation
13
Full Year 2015 Results
Net Income by segment: Net Income %
13.3%
13.9%
Basic EPS (SAR)
2.72
3.13
183 1,674
55
78
1,916
-77.7%
+36.2%
+3.9%
75
+46.1%
SAR Million
Full Year 2014
Almarai Company
Dairy
Bakery
2015 Q4 Earnings Presentation
Poultry
Other
Full Year 2015
14
Segment Reporting Full Year SAR Million
Sales Depreciation Net Income Net Income % to Sales
Dairy & Juice
Bakery
Poultry
Other
Almarai
Activities
Consolidated
10,741 (1,030) 2,096
1,626 (168) 205
1,262 (304) (214)
166 (86) (171)
13,795 (1,588) 1,916
19.5%
12.6%
(17.0%)
(103.3%)
13.9%
Total Assets
17,165
2,127
5,441
2,638
27,371
Return on Assets
12.2%
9.6%
(3.9%)
(6.5%)
7.0%
8.5% 3.9%
6.1% 36.2%
23.4% (46.1%)
11.9% 77.7%
9.4% 14.4%
Growth versus 2014 - Sales - Net Income
Almarai Company
2015 Q4 Earnings Presentation
15
Cash Flow Bridge 1,522
(4,409)
4,932 Loans Issues /
Payments / Charges
(599) (204)
Capex / Biological Assets
Dividend
2,039
Others
797 Operating Cash Flow Cash at 31 Dec 2014
Almarai Company
+439 m
SAR 523 m Net Free Cashflow
Cash at 31
SAR 1,242 m
2015 Q4 Earnings Presentation
Dec 2015
16
Net Debt…absolute value is growing but moving within well defined measures 10,000
350%
3.1x 9,000
3.0x
2.8x
2.8x
8,000
SAR million
7,000
2.3x
2.7x
300% 250%
2.2x
6,000
200%
5,000
150%
4,000 3,000
98% 72%
101% 75%
75%
74%
74%
100%
2,000 50%
1,000 3,869
4,606
6,653
8,237
8,053
8,762
9,344
0
0%
2009
2010 Net Debt
Almarai Company
2011
2012
Net Debt / Equity Ratio
2015 Q4 Earnings Presentation
2013
2014
2015
Net Debt / EBITDA
17
Quarterly Performance – Net Income 2015 versus 2014 = 14.4%
Q3 = 10.3%
600
Q2 = 22.4%
Q4 = 13.0% 500
400
Q1 = 12.0%
484
428
373
286
284
249
369
595
539
476
450
430
425
363
433
398
380
343
287
306
274
255
242
235
100
234
200
349
530
300
197
SAR Million
*
0
* Capital gain of SAR 47m in 2012
Almarai Company
2015 Q4 Earnings Presentation
18
EBIT and EBITDA margins are starting to improve…… Revenue, EBITDA and EBIT Evolution CAGR 2009 – 2015: 15.3% (w/o impact of acquisitions 10.7%) 26.7%
27.2%
25.6% 24.2%
21.8%
23.5%
24.2%
13,795
21.1% 19.1%
SAR Million
+66 Base Point
24.4%
Revenues
11,219 16.9%
EBIT % to Revenues
16.0%
12,606 15.5%
+93 Base Point 16.4%
9,883
EBITDA % to Revenues
7,951 6,931 5,869
2009
Almarai Company
2010
2011
2012
2015 Q4 Earnings Presentation
2013
2014
2015
19
Key Share Data Key Statistics for Almarai (31 Dec 2015) Share Price (SAR)
78.24
Current P/E Ratio (ttm)
25.29
Earnings Per Share (SAR) (ttm) Market Cap (M SAR) Shares Outstanding (M) Dividend Indicated Gross Yield
Almarai Company
3.09 46,944 600 1.47%
2015 Q4 Earnings Presentation
20
Future Strategy
Future Strategy
Key Objectives Going Forward 1.
Quality you can trust
2.
Defend the Fort – ensure the core business of Almarai (Dairy, Juice, Foods, Bakery) continues to deliver above market performance
3.
Turn the not yet performing assets into profit, target to achieve cost of capital • Poultry • IDJ • IPNC
4.
Secure the supply of alfalfa from outside KSA
Almarai Company
2015 Q4 Earnings Presentation
22
Thank you
Disclaimer Information contained in this presentation is subject to change without further notice, its accuracy is not guaranteed and it may not contain all material information concerning the company. Neither we nor our advisors make any representation regarding, and assume no responsibility or liability for, the accuracy or completeness of, or any errors or omissions in, to any information contained herein.
In addition, the information contains projections and forward-looking statements that reflect the company’s current views with respect to future events and financial performance. These views are based on current assumptions which are subject to various risks and may change over time. No assurance can be given that future events will occur, that projections will be achieved, or that the company’s assumptions are correct. Actual results may differ materially from those projected. This presentation is strictly not to be distributed without the explicit consent of Almarai Company management under any circumstances.
Almarai Company
2015 Q4 Earnings Presentation
2
Business Highlights
Highlights – Full Year 2015 • Robust growth across all key products except cheese and within all geographical markets except Jordan • Market share gains across all products categories except UHT Milk • Successful launch of 15 new products • Reducing poultry segment losses by nearly 50% but still more work to be done • Business growth, market share gains and investment plan in Egypt continues in line with 5 year plan • Better procurement and cost control focus resulting in significant improvement in operational metrics • Further vertical alignment by securing additional land and feed supply under own management • Investment in our people with continued focus on training, benefit re-alignment and developing local talent; compensation scheme restructured to align rewards in line with both short term and long term goals • Successful settlement of the fire claim Solid performance of 2015 paving the way for achieving Almarai 2020 vision
Almarai Company
2015 Q4 Earnings Presentation
4
Impact of increase in energy costs on Almarai Impact As announced earlier, the expected direct impact of increase in energy costs on Almarai is ~200M SAR and the indirect impact is expected to be ~100M SAR. In addition, the expected impact of gradual move towards 100% importation of feed by 2019 will result in an additional 200M SAR cost, net of existing subsidy, for the year 2016. Mitigation plan Almarai already embarked on various efficiency projects to improve its supply chain. The positive effects of these mitigating actions will unfold during 2016 and beyond. A non exhaustive list of some of these key projects are: • Zabadi 60 • Telematics • Roadnet • New pallet design • New design of the purple crates • New bakery basket • Juice – 12 in a box • Dubai depot utilisation
Almarai Company
2015 Q4 Earnings Presentation
5
Highlights – Full Year 2015 EBITDA
Sales Revenue SAR 13.8 B 2014 2013 SAR 12.6 B B SAR 11.2
+9.4% +12.4%
SAR 3.3 B 2014 SAR 3.0 B
2015
SAR 4.0 B 2014 SAR 2.7 B
Employees 2014 38 k
Almarai Company
+10.4%
+46.2%
• • •
Insurance Claim Settlement Vanilla Sukuk of SAR 1.6B Expansion of Alfalfa sourcing
2015 Q4 Earnings Presentation
+14.4%
Free Cash Flow 2015
SAR 523 M 2014 SAR 84 M
Major Transactions
2015
42 K
2014 SAR 1.7 B
2015
SAR 4.9 B +54.2%
+10.7%
SAR 1.9 B
Capital Expenditure
Operating Cash Flow 2014 SAR 3.2 B
Net Income 2015
2015
2015
+521.5%
New Products •
15 new products in 2015
6
Innovation pipeline for 2015 1st Quarter 2nd Quarter 3rd Quarter
4th Quarter
Almarai Company
2015 Q4 Earnings Presentation
7
Sales growth was funded by continued investment in key categories
Capex spend for the year 2015 was 4.0 B SAR which is inline with our annual capex run rate.
• • • •
Manufacturing and Farming spent Capex of ~2.1 B SAR for various capacity expansion projects. Replacement and other capex including IDJ and US land development, accounted for another ~0.8 B SAR. Sales depot and logistics expansion accounted for ~0.6 B SAR. Poultry capex spend for the year reached ~ 0.5 B SAR.
Farming (Arable) Poultry Processing
Bakery Hail
Farming (Arable)
Bakery Hail
Makkah East Depot Operations (CPP3) Almarai Company
2015 Q4 Earnings Presentation
8
Sales Highlights
Sales Analysis by Segment by Product 13.8
Total Sales Revenue
(+1.2)
+9.4%
Sales Revenue
Dairy & Juice
Bakery
Poultry
Others
10.7 (78%)
1.6 (12%)
1.3 (9%)
0.2 (1%)
(+ 0.8)
(+0.1)
(+0.2)
(+0.0)
+6.1%
+23.4%
+11.9%
By Segment
+8.5%
Sales Revenue By Product
Fresh Dairy
Long-Life Dairy
Fruit Juice
Cheese & Butter
Bakery
Poultry
Other Sales
5.8 (42%)
1.3 (10%)
1.9 (14%)
1.7 (12%)
1.6 (12%)
1.3 (9%)
0.2 (1%)
(+0.5)
(+0.1)
(+0.2)
(-0.0)
(+0.1)
(+0.2)
(+0.0)
+10.2%
+8.6%
+13.7%
-2.0%
+6.1%
+23.4%
+11.9%
Note: All Amount in Billion Saudi Riyals
Almarai Company
2015 Q4 Earnings Presentation
10
Sales Analysis by Region by Country 13.8
Total Sales Revenue
(+1.2)
+9.4%
Sales Revenue By Region
KSA
Other GCC Countries
Other Countries
8.8 (64%)
3.7 (26%)
1.3 (10%)
(+0.8)
(+0.3)
(+0.2)
+8.5%
+10.3%
+13.5%
Sales Revenue By Country
KSA
UAE
Oman
Qatar
Kuwait
Bahrain
Egypt
Jordan
Others
8.8 (64%)
1.3 (10%)
0.7 (5%)
0.7 (5%)
0.6 (5%)
0.3 (2%)
0.9 (6%)
0.3 (2%)
0.2 (1%)
(+0.8)
(+0.1)
(+0.0)
(+0.1)
(+0.0)
(+0.0)
(+0.2)
(-0.0)
(-0.0)
+8.5%
+13.4%
+4.5%
+14.8%
+6.7%
+9.2%
+36.4%
-7.1%
-24.1%
Note: All Amount in Billion Saudi Riyals
Almarai Company
2015 Q4 Earnings Presentation
11
Statement of Income
Full Year
SAR million
2015
Sales
13,795
Cost of sales
(8,511)
Change
12,606 (8,013)
9.4% 6.2%
Gross Profit
5,283
4,593
Selling and Distribution Expenses
(2,612)
(2,246)
16.3%
(409)
(349)
17.3%
General and Administration Expenses
2,262
Operating Income
1,998
15.0%
13.2%
Share of Results of Associates
(37)
(8)
357.2%
Other (Expense) / Income
(131)
(27)
391.1%
Funding Costs
(276)
(266)
3.8%
46
58
(20.2%)
1,864
1,755
Exchange and Currency Gains/(Losses) Income from Main Operations Zakat and Foreign IncomeTax Income before Non Controlling Interest
(66) 1,799
Non Controlling Interest
117
Net Income Earnings Per Share (Basic)
Net Income %
Almarai Company
2014
(71) 1,684 (10)
1,916
1,674
3.13
2.72
13.9%
13.3%
2015 Q4 Earnings Presentation
6.2% (7.5%) 6.8% n.a 14.4%
12
Full Year Results
Operating Performance Gross Profit in million SAR
% to Sales
36.4%
38.3%
Operating Income
Almarai Company
+691
in million SAR
in million SAR
15.8%
16.4%
5,283 4,593
Net Income 13.3%
13.9%
1,916
2,262 1,998
+264
1,674
+241
Full Year
Full Year
Full Year
Full Year
Full Year
Full Year
2014
2015
2014
2015
2014
2015
2015 Q4 Earnings Presentation
13
Full Year 2015 Results
Net Income by segment: Net Income %
13.3%
13.9%
Basic EPS (SAR)
2.72
3.13
183 1,674
55
78
1,916
-77.7%
+36.2%
+3.9%
75
+46.1%
SAR Million
Full Year 2014
Almarai Company
Dairy
Bakery
2015 Q4 Earnings Presentation
Poultry
Other
Full Year 2015
14
Segment Reporting Full Year SAR Million
Sales Depreciation Net Income Net Income % to Sales
Dairy & Juice
Bakery
Poultry
Other
Almarai
Activities
Consolidated
10,741 (1,030) 2,096
1,626 (168) 205
1,262 (304) (214)
166 (86) (171)
13,795 (1,588) 1,916
19.5%
12.6%
(17.0%)
(103.3%)
13.9%
Total Assets
17,165
2,127
5,441
2,638
27,371
Return on Assets
12.2%
9.6%
(3.9%)
(6.5%)
7.0%
8.5% 3.9%
6.1% 36.2%
23.4% (46.1%)
11.9% 77.7%
9.4% 14.4%
Growth versus 2014 - Sales - Net Income
Almarai Company
2015 Q4 Earnings Presentation
15
Cash Flow Bridge 1,522
(4,409)
4,932 Loans Issues /
Payments / Charges
(599) (204)
Capex / Biological Assets
Dividend
2,039
Others
797 Operating Cash Flow Cash at 31 Dec 2014
Almarai Company
+439 m
SAR 523 m Net Free Cashflow
Cash at 31
SAR 1,242 m
2015 Q4 Earnings Presentation
Dec 2015
16
Net Debt…absolute value is growing but moving within well defined measures 10,000
350%
3.1x 9,000
3.0x
2.8x
2.8x
8,000
SAR million
7,000
2.3x
2.7x
300% 250%
2.2x
6,000
200%
5,000
150%
4,000 3,000
98% 72%
101% 75%
75%
74%
74%
100%
2,000 50%
1,000 3,869
4,606
6,653
8,237
8,053
8,762
9,344
0
0%
2009
2010 Net Debt
Almarai Company
2011
2012
Net Debt / Equity Ratio
2015 Q4 Earnings Presentation
2013
2014
2015
Net Debt / EBITDA
17
Quarterly Performance – Net Income 2015 versus 2014 = 14.4%
Q3 = 10.3%
600
Q2 = 22.4%
Q4 = 13.0% 500
400
Q1 = 12.0%
484
428
373
286
284
249
369
595
539
476
450
430
425
363
433
398
380
343
287
306
274
255
242
235
100
234
200
349
530
300
197
SAR Million
*
0
* Capital gain of SAR 47m in 2012
Almarai Company
2015 Q4 Earnings Presentation
18
EBIT and EBITDA margins are starting to improve…… Revenue, EBITDA and EBIT Evolution CAGR 2009 – 2015: 15.3% (w/o impact of acquisitions 10.7%) 26.7%
27.2%
25.6% 24.2%
21.8%
23.5%
24.2%
13,795
21.1% 19.1%
SAR Million
+66 Base Point
24.4%
Revenues
11,219 16.9%
EBIT % to Revenues
16.0%
12,606 15.5%
+93 Base Point 16.4%
9,883
EBITDA % to Revenues
7,951 6,931 5,869
2009
Almarai Company
2010
2011
2012
2015 Q4 Earnings Presentation
2013
2014
2015
19
Key Share Data Key Statistics for Almarai (31 Dec 2015) Share Price (SAR)
78.24
Current P/E Ratio (ttm)
25.29
Earnings Per Share (SAR) (ttm) Market Cap (M SAR) Shares Outstanding (M) Dividend Indicated Gross Yield
Almarai Company
3.09 46,944 600 1.47%
2015 Q4 Earnings Presentation
20
Future Strategy
Future Strategy
Key Objectives Going Forward 1.
Quality you can trust
2.
Defend the Fort – ensure the core business of Almarai (Dairy, Juice, Foods, Bakery) continues to deliver above market performance
3.
Turn the not yet performing assets into profit, target to achieve cost of capital • Poultry • IDJ • IPNC
4.
Secure the supply of alfalfa from outside KSA
Almarai Company
2015 Q4 Earnings Presentation
22
Thank you
